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Unintended Consequences

Posted 05 May 2016 by Donna Scully

What are the potential unintended consequences of proposed Autumn Statement reforms?

One of the themes to emerge at a recent Insurance Times Fraud Charter meeting was the importance of understanding the potentially hazardous legal landscape if the government’s proposed whiplash reforms are implemented. The proposals must be carefully evaluated for their likely impact on innocent accident victims, and the legal and insurance sectors.

The potential unintended consequences of the reforms must be carefully considered before they are pursued further. It is clear that claimant lawyers act as a filter to remove unmeritorious and fraudulent claims at source, preventing them from getting off the ground. It will be difficult for ordinary people to run their own claims, whether online or not, and without expert representation from lawyers. Many people will struggle to run an accident claim without help from a lawyer.

The terrifying prospect is that this advice gap will be filled by claims management companies. Without the filtering of claims by reputable lawyers, and with some unprofessional CMCs ‘encouraging’ claims, the number of claims and fraudulent cases may actually increase.

The prospect of increased cold calling and dubious marketing practices must be the last thing that is intended by the Ministry of Justice.

Some CMCs are already preparing for a rise in the small claims limit by employing, or even worse, having self-employed, McKenzie Friends to “assist” accident victims, taking a huge cut of their damages for the privilege. These ‘friends” have no experience, no professional indemnity insurance and, perhaps in some cases, questionable morals.

As with every government proposal, the whiplash reforms must be accompanied by an impact assessment that outlines the likely consequences for all stakeholders. This must be thorough and comprehensive, using all available data sources, and must assess the unintended consequences in detail.

I hope that the MoJ officials present at the meeting were listening to those around the table, from all sides of the debate, and to the serious concerns expressed. I would not like to see a series of reforms that make the situation worse.

We have worked for years to improve the system with improved data sharing, the Portal, fixed costs, AskCUEPI, MedCo and the Fraud Taskforce. That hard work should not go out of the window through ill-conceived and poorly considered reforms.


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Directors: John Carpenter, Donna Scully

Carpenters is authorised and regulated by the Solicitors Regulation Authority under number 625845 www.sra.org.uk
and is authorised and regulated by the Financial Conduct Authority under number 755996 www.fca.org.uk

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